“The rules-based system just hasn’t worked. China’s system is so opaque that you can’t see the subsidies. And when you’ve got China not interested in new rules and the US not interested in a referee, you’ve got two of the world’s biggest actors who aren’t on board.” — Soumaya Keynes
It would have been nice to get John Maynard Keynes on the show to get his critique of Trump’s trade war. But in the long run, we’re all dead — even old Maynard. So instead, we found his great-great-niece, Soumaya Keynes — Financial Times columnist and co-author of How to Win a Trade War: An Optimistic Guide to an Anxious Global Economy.
Having already appeared on Jon Stewart this week, Soumaya has a bit of Keynesian star quality about her. But she’s also a first-rate economist. Her thesis is that the old rules-based trading system that her great-great-uncle helped design after World War II is gone. And it ain’t coming back. China’s subsidies are so opaque that rules can’t be written to constrain them, let alone enforced. The US is no longer willing to submit to a referee. Without the two biggest players, no rules-based system is meaningful.
So — now what? Keynes says we must think like a trade warrior. Donald Trump should leverage the tools available — but use them strategically. Trump’s error in his second term was not being tough on China while being too tough on everyone else, especially allies like Canada and Mexico.
Soumaya Keynes’ most contemporary idea might be her most Keynesian one. John Maynard Keynes proposed penalties for countries running large trade surpluses as well as those running deficits — recognising that global imbalances are a two-sided problem. That idea didn’t make it into the 1944 Bretton Woods agreement. Eighty years later, in equally anxious economic times, his optimistic great-great-niece is reviving it.
Five Takeaways
• Can Trade Wars Be Won? Yes, Sometimes. Countries in weaker positions cave. The smaller power’s only defence — coordinating with other smaller powers — is extremely hard to sustain. There’s always an incentive to cut a deal first.
• China Is the Doper. The global trading system is a sports game. China’s subsidies are performance-enhancing drugs. Unlike doping in sport, they’re invisible. You can write a rule. You can’t enforce it. The WTO has not solved this.
• Trump Was Right About China, Wrong About Everything Else. Lighthizer in Trump’s first term had a focused China strategy. In the second term: tariffs on everyone simultaneously. This dissipated leverage and alienated the allies needed to pressure Beijing.
• The Rules-Based System Is Gone. China won’t sign up to new rules. The US won’t submit to a referee. Without the two biggest players, nothing is meaningful. Yearning for the old system is not an option.
• AI and the Next Trade War: Services. Chip restrictions are only the start. If AI eliminates demand for UK financial and legal services, a new wave of trade tensions follows. Nobody knows how this plays out. The book’s tools will be relevant for longer than the current tariff cycle.
About the Guest
Soumaya Keynes is an economics columnist at the Financial Times and co-author, with Chad P. Bown, of How to Win a Trade War (Simon & Schuster, May 26, 2026).
References
How to Win a Trade War by Soumaya Keynes and Chad P. Bown (Simon & Schuster, May 26, 2026)
Soumaya Keynes on The Daily Show with Jon Stewart, May 19, 2026
About Keen On America
Nobody asks more awkward questions than the Anglo-American writer and filmmaker Andrew Keen.
Website: https://keenon.tv/ Substack: https://keenon.substack.com/ YouTube: https://youtube.com/@KeenOnShow
Chapters:
00:00:31 Introduction: Keynes is dead, long live Keynes
00:01:44 The Keynesian penalty for surplus countries
00:03:38 Can trade wars be won?
00:06:10 The coordination problem
00:08:08 Jon Stewart and Trump’s trade policy
00:12:00 Trump’s first vs second term
00:20:00 China as the doper
00:24:00 Why the rules-based system can’t be restored
00:31:37 Inflation as a political obstacle
00:35:41 Is Keynes’s view of China Trumpian?
00:37:19 AI and services trade disruption